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First home buyers could soon use superannuation to buy property; Nick Xenophon will introduce legislative changes in the spring session of parliament
Topic Started: 28 Jul 2014, 05:33 PM (16,479 Views)
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First-timers could soon use super to buy property

Posted on Monday, July 28 2014 at 1:36 PM

First homebuyers trying to enter the booming property market might soon be able to use their own superannuation as a deposit for a first home.

Independent Senator for South Australia Nick Xenophon will introduce legislative changes in the spring session of parliament, which could have a profound impact on the way first homebuyers purchase property and enter the market.

For the first time, a proposal would allow first homebuyers to access their superannuation and use this as a deposit, rather than saving for years and years.

The scheme would be based on a similar one in Canada, which is known as the Home Buyers’ Plan.

In Canada, up to $25,000 can be accessed for a first home and the amount has to be paid back into the super fund within 15 years.

“With more and more Australians finding it difficult to break into home ownership, (and) adopting the Canadian scheme would make a difference to many thousands of Australians each year,” Xenophon says.

He adds housing affordability in Australia has fallen for the past three decades, as house prices outstrip income growth.

This year’s annual affordability survey by Demographia found Australia had the second-worst housing affordability in the world, behind Hong Kong.

All 39 Australian housing markets surveyed were ‘seriously’ or ‘severely’ unaffordable, defined as having average house prices of more than four times the average income.

Read more: http://www.apimagazine.com.au/api-online/news/2014/07/first-timers-could-soon-use-super-to-buy-property
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Dam
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if this proposal is serious, it will be an opportunity to buy few cheap ones and flip them to the FHB after the change, easy cash.
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stinkbug
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It won't get up, but it will be very, very interesting to follow the debate and see what else falls out of it.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Massive
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can't see the problem in it ;)
Edited by Massive, 28 Jul 2014, 07:44 PM.
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Sydneyite
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I agree it won't get up, but there is actually a strong economic argument for this. Why should people have to take on more debt earlier in life, and pay interest on it etc, when they have savings available in their super? It's no co-incidence I think that Australia's private superannuation pool has grown almost in lock-step with our aggregate household/mortgage debt levels.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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silverman47
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im going to disagree and say it will get up. Its a clever way of increasing the first home owner grant, and avoiding alot of blame for what follows.
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Perthite
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28 Jul 2014, 07:51 PM
I agree it won't get up, but there is actually a strong economic argument for this. Why should people have to take on more debt earlier in life, and pay interest on it etc, when they have savings available in their super? It's no co-incidence I think that Australia's private superannuation pool has grown almost in lock-step with our aggregate household/mortgage debt levels.
Your seen how much degrees are going to cost?

You amuse me occasionally.

Like the US the young will start life in a noose.
Edited by Perthite, 28 Jul 2014, 08:16 PM.
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Poontang
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I think it is better than first home owner grants...

It is there own money. I would prefer to see some sort of access to super to fund deposits than have a FHOG.

I have spoken with my father about this in the past and agree with him in so much as anyone should be able to use part of their super as a deposit.

Either an equity type arrangement with your super, ie withdraw enough from super to fund 10% deposit and your super owns 10% of your house. If/when you sell, 10% of the sale price goes back into super. Buy for $450k using $45k from super, sell a few years later for $600k then $60k goes into your super.

Divorced persons like my father would benefit from this, older people generally have higher incomes than 1st home buyers but separation or even a death can make a large hit on a financial base. Having access to funds from super can help the rebuilding process.


Personally, I think there should be no limit, if you have the funds to purchase a property outright with your super you should be allowed to and then rent it back from your super to build a balance to retire on. Why pay for someone elses property if you have the means to buy your own this way? It is a rental available for someone else, and compulsory savings for yourself.
There are some people who seem angry and continuously look for conflict.
Walk away, the battle they are fighting isn't with you, it's with themselves.

The first lesson of economics is scarcity: There is not enough of anything to satisfy all who want it.
The first lesson of politics is to disregard the first lesson of economics. ~ Thomas Sowell.

Who was the fool, who the wise man, who the beggar or the Emperor? Whether rich or poor, all are equal in death.
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silverman47
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Poontang
28 Jul 2014, 08:54 PM
I think it is better than first home owner grants...

It is there own money. I would prefer to see some sort of access to super to fund deposits than have a FHOG.

I have spoken with my father about this in the past and agree with him in so much as anyone should be able to use part of their super as a deposit.

Either an equity type arrangement with your super, ie withdraw enough from super to fund 10% deposit and your super owns 10% of your house. If/when you sell, 10% of the sale price goes back into super. Buy for $450k using $45k from super, sell a few years later for $600k then $60k goes into your super.

Divorced persons like my father would benefit from this, older people generally have higher incomes than 1st home buyers but separation or even a death can make a large hit on a financial base. Having access to funds from super can help the rebuilding process.


Personally, I think there should be no limit, if you have the funds to purchase a property outright with your super you should be allowed to and then rent it back from your super to build a balance to retire on. Why pay for someone elses property if you have the means to buy your own this way? It is a rental available for someone else, and compulsory savings for yourself.
your dead right, you shouldnt be forced to invest in the share market for your retirement, if property seems like the sensible option you should be able to choose that. A persons home is in most cases their largest investment.
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Massive
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Sydneyite
28 Jul 2014, 07:51 PM
I agree it won't get up, but there is actually a strong economic argument for this. Why should people have to take on more debt earlier in life, and pay interest on it etc, when they have savings available in their super? It's no co-incidence I think that Australia's private superannuation pool has grown almost in lock-step with our aggregate household/mortgage debt levels.
conversely having your money in a fund as early as possible should make for better gains in retirement through compound earnings...

unlocking your super will just mean people will likely put down more which will take just as long to pay off, with same amount of interests and risk entering retirement worse off - especially if their property doesn't see good capital gains..

cant see a problem with people controlling where their super goes - and splitting it over various properties if they choose, but putting it all in the family home , will a-drive up prices, b- encourage joe blow to throw all his finances and financial future into his PPOR...

eggs in one basket is not often a recommended investment strategy
Edited by Massive, 28 Jul 2014, 09:15 PM.
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